IBM making stripped-down 'network computers' Machines will be cheaper, link with server units in offices

September 06, 1996|By BOSTON GLOBE

IBM Corp. has begun making cheap, stripped-down "network computers" that might one day replace millions of powerful desktop machines now used in corporate America. The new International Business Machines Network Station will be the first real-world test of the controversial network computing concept.

The Network Station will sell for about $700, compared with typical desktop computer prices of $2,000 or more. But unlike the standard desktop machine, the Network Station won't be able to do very much on its own.

It relies on a computer chip that is widely used in cable TV decoder boxes. It has just four megabytes of memory, rather than the 16 megabytes that have become standard in desktop computers, and no disk drive.

In fact, the Network Station will be a somewhat more muscular version of the old "dumb" computer terminals still used in many offices. The Network Stations will connect with "server" computers, such as more powerful desktop computers, larger minicomputers or even room-sized mainframes. Workers using the Network Stations would run programs stored on the server, rather than on their individual computers.

Philip Hester, vice president of IBM's network computing unit, said Network Stations would be far cheaper to run than regular desktop computers. IBM estimates it costs a company between $10,000 and $12,000 per year to buy, operate and maintain each of its personal computers. Hester said the Network Station would lower the cost by 50 percent to 75 percent, mainly because it would require far less maintenance.

"You can have a device that is both lower in initial purchase price and lower [in] cost of ownership than a PC," Hester said.

IBM estimates that American companies have 30 million to 50 million "dumb" computer terminals and PCs being used as terminals. The Network Station is intended to replace these devices.

Hester said there are no near-term plans to create Network Station products for home use. Network connections in most homes would have to be made over telephone lines, and such connections are too slow for efficient networking, he said.

The concept of network computers first gained widespread attention last year, thanks to Lawrence Ellison, chief executive officer of Oracle Corp., the leading maker of computer database software. Ellison argued that cheap, simple computers linked to corporate networks or the Internet would be better than expensive desktop machines loaded with costly software.

Ellison made no secret that he favored network computers because they would weaken archrival Microsoft Corp., the leading maker of desktop computer software.

Eileen O'Brien, an analyst with IDC Corp. in Framingham, Mass., believes many companies will embrace the network computer concept. But she doubts this will be a problem for Microsoft.

O'Brien said many network computer users will build their networks around Microsoft's Windows NT operating system, and that they will continue to run Microsoft Office business applications on the servers. "I think it's fair to say that Microsoft has won the desktop war," she said.

Several major computer companies pledged earlier this year to support a standard design for network computers, but IBM is the first to begin manufacturing the devices. Hester said test versions of the Network Station are already in use by some of IBM's major customers. IBM plans to start shipping large quantities of the machines by the end of the year.

IBM stock yesterday fell $1.50, to $113.125.

Pub Date: 9/06/96

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